Measure What Matters Part 3 – Trading Behaviors and Habits

The next measurement is a step beyond Mindset and Execution. It drills down into our problems and issues to arrive at what we really want: our desired trading behaviors.

Traders will often go to trade a plan, and when they experience performance related losses they try to resolve the issue by changing their strategy instead of focusing on the real cause of the losses.

For example, instead of applying the proper feedback and improving their execution, they can end up spending years solving the wrong problem. Instead of gaining say 3 years of growth from 3 years of experience, they end up in a loop and get 1 year of experience, 3 times.

When I see a private client or a Mind Muscles Academy student for the first time, I ask them three different things.

The first is what issues are holding you back from the things you want. With some encouragement, it is fairly easy to come up with this list.

The second question I ask is, what you would prefer instead for each specific issue. Most respond by saying that they just don’t want the issue that they have. They have no clear picture or vision of what they really want as a positive alternative.

After some work and getting some clarification, we can come down to the underlying desire that matches their heart and their goals. Often this process of clarifying their issues and their outcomes, in and of itself, creates a foundation for positive changes.

The third question requires a little more work, but is very important to the whole process. That is deriving the positive intent out of the behavior that creates each issue. What makes this so effective is the subject of another article, but it is a critical part of our process.

The Behavioral Issues

First we identify our behavioral issues, then we measure our behavior on all our specific issues each day. 

The measurements are converted to a clear graphic that can be understood in a quick glance. This way, we can see clearly what issues are making progress, and what issues need additional attention.

In our core Mind Muscles courses everyone has access to these graphics so that we can create group support for every trader who wants to make progress.

Let me show you what this looks like. 

Below is the graphical representation of the progress this trader made in one of our Boot Camps. The red represents a huge problem, the yellow represents a significant problem, the light green represents a minor problem, and the dark green represents….no problem.

Within a second, this trader can see his progress on each behavioral issue.

In our work, we will list and track the major trading issues that have prevented us from having the success we want. The 3 columns can be seen in the blank graphic below:

In the image below a Mind Muscles student describes his behavioral issues in more detail. This one shows his comments on Fear of loss, the first issue in his list. Every issue has a pop-up box that gives more details of that issue: 

The pop up box indicates that he’s afraid that even if he follows his strategy, this one trade might be a loser. The thought of the loss is upsetting, so he lets the trade go. This sidelines him and keeps him from pulling the trigger.

We can see the other issues that we worked on and developed with this specific trader.

As mentioned in Part 1 of this series, if we look at the problems of becoming a successful trader, and put them all in one big bucket, they can feel overwhelming and unsolvable.

However, once we break them down and we reframe the problems, it is wonderful to see the excitement on the traders' faces as they realize that they can make steady, meaningful progress a step at a time.

The Positive Intent

We dig deep and find the positive intent of each behavioral issue. In our current model, we operate as though each behavioral issue was created originally with a positive intention, and replicates itself in our brains.

For example, the fear of loss prevents us entering into trades which creates negative emotions, so we stay out of the trade. Once we recognize that the positive intent is to prevent negative emotions by preventing us from entering a trade, then we can take this to the next step.

Positive intent of each behavioral issue is can obviously be different for each trader. These are just examples.

The Desired Outcome

The third column is for the desired outcome for each issue. 

Often times, I will have to drill down to find out what is really going on and what is really desired. This is critical for later steps when the trader is able to create a visceral vision and really experience and touch the desired outcome in a way that feels real.

We drill down on the desired outcome, so that it is stated in positive language that represents a state of mind that underlies the desired behavior.

Now the trader has the tools in this app to really measure what matters.

When we add our S.E.T. scores, our Lucrative trades, and our issues and outcomes to a color-coded graphic, in one glance we can watch our progress, and note what needs more attention.

Even more exciting, is that we can see the impact of our S.E.T. scores and our Lucrative trades on the bottom line P&L. The more precise the metrics we create for ourselves as traders, the clearer is our window to reality.

This is REALLY measuring what matters!